The Usual Suspects: Pump and Dump

In todays Market Soapbox, I mentioned 6 stocks that helped keep the DJIA & SP500 indexes above water: Fannie Mae (FNM), Freddie Mac (FRE), MBIA (MBI), General Motors (GM), Microsoft (MSFT) and ExxonMobil (XOM).

Fannie, Freddie and MBIA are scandal ridden; GM's bonds were just reduced to junk; Microsoft and ExxonMobil are in pullback sectors. With the exception of ExxonMobil (outside of going parabolic) and Microsoft, these stocks shot up big today and actually are behaving like high beta, tech stocks.

No one in their right mind should be catching these falling knives. I have been seeing alot of this "action" over the last couple of years, especially in the NDX and Nasdaq.

I think we just saw the "Pump". Like a puffer fish, The Boys from Bermuda bought in today, in hopes of attracting momentum players and "bargain" hunters. In a few days the stocks should be pumped up enough.

Just when the surge flattens, the Boys from Bermuda will buy some cheap bermuda shorts, and then proceed to take profits and evacuate their long positions. The shorts will play out nicely when the small fish panic and get shook out. Thats the "Dump". Click below to see the chart over the last 6 months.

The Usual Suspects

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